The correct answer is: A. budget production.
Budget production is the amount of goods that a company plans to produce in a given period of time. It is calculated by adding the budgeted sales to the target ending finished goods inventory and subtracting the beginning finished goods inventory.
Budgeted sales is the amount of goods that a company expects to sell in a given period of time. It is calculated by multiplying the expected sales price by the expected sales volume.
Target ending finished goods inventory is the amount of finished goods that a company wants to have on hand at the end of a given period of time. It is calculated by multiplying the target finished goods inventory turnover rate by the expected sales volume.
Beginning finished goods inventory is the amount of finished goods that a company has on hand at the beginning of a given period of time. It is calculated by taking the physical count of finished goods on hand at the beginning of the period.
The formula for calculating budget production is:
Budget production = Budgeted sales + Target ending finished goods inventory – Beginning finished goods inventory
For example, if a company expects to sell 100 units of a product at a price of $10 per unit, and it wants to have an ending finished goods inventory of 20 units, and it has a beginning finished goods inventory of 10 units, then its budget production would be:
Budget production = 100 units * $10/unit + 20 units – 10 units = $1100
Budget production is important because it helps companies to plan their production schedules and to ensure that they have enough finished goods on hand to meet customer demand.